A prenuptial agreement isn’t just for celebrities, the wealthy or older couples. More people of all ages are choosing prenups as a way to protect their finances, clarify expectations and plan for the future. Whether you’re getting married for the first time or entering a second marriage, understanding how a prenup works can help you decide if it’s right for you.
Andrew Howie, an experienced family law attorney who helps clients draft prenuptial agreements, recognizes the benefits of being open and proactive. “No one wants to get sick or injured, but we still buy health insurance,” Howie says. “No one wants to get divorced or die, but we should consider the effects of what will happen when death or divorce with your spouse occurs. A prenuptial agreement provides that peace of mind.”
What is a prenuptial agreement?
A prenuptial agreement is a contract established prior to marriage that determines what will happen to premarital assets (such as property) in case the marriage ends or one spouse dies. A prenup can also include:
- Premarital assets and property
- Income earned during marriage
- Debt responsibilities
- Inheritance and estate planning considerations
- Business interests or intellectual property
Why people choose prenuptial agreements
If your premarital estate is significant, it makes sense to ensure that your spouse will share in it only as much as you wish should you divorce or die. This is especially true if you have children from a prior relationship whose inheritance you want to protect. A prenup also can protect income and assets you acquire during the marriage. If you don’t set terms for those before you get married, you may end up paying unexpected support or alimony to your spouse.
Some states require each party to have an attorney to create a prenup and some don’t. Regardless, each party should have their own attorney working on their behalf to draft the prenuptial agreement to help to avoid a court declaring a prenup invalid. At the same time, you can consider important joint financial planning decisions such as life insurance, living trusts and estate plans.
While a prenup is a binding contract, you are able to amend it in the form of a postnuptial agreement if your circumstances change. Howie cautions, “Each state has its own interpretation and enforceability of marriage postnuptial agreements, so please consult with an attorney licensed in your state should you want to consider that action.”
Who should consider a prenup?
A prenuptial agreement is often associated with preparing for divorce, but many couples choose a prenup for practical, forward-looking reasons. At its core, a prenup helps couples clarify expectations and protect their financial interests before marriage.
Financial protection for both spouses
One of the primary benefits of a prenuptial agreement is financial protection. A prenup can define how assets, income and debt will be handled if the marriage ends due to divorce or death. This can be especially important if one or both spouses enter the marriage with significant assets, own property or expect an inheritance.
Clear communication about money
Money is one of the most common sources of conflict in relationships. Creating a prenuptial agreement requires couples to have open, honest conversations about finances, including spending habits, debt, savings goals and long-term plans. For many couples, this process helps establish trust and reduce misunderstandings before marriage.
Planning for the unexpected
While no one enters a marriage expecting it to end, life is unpredictable. Divorce, illness or death can create emotional and financial strain. A prenuptial agreement allows couples to make important decisions in advance, rather than leaving those outcomes to state law or court decisions during an already difficult time.
Is a prenup right for you?
A prenup is not for everyone. But the following three steps can help you start to explore if a prenup is the right approach for you and your future spouse:
- Review your financial situation:
- Do you own any real estate or run a business?
- How will you handle household expenses, bills and taxes?
- Will all or part of your estate go to someone other than your spouse when you die, such as your children from a previous relationship?
- If you need help determining these answers, seek the assistance of an attorney or financial professional who can provide objective advice.
- Find your comfort level:
- What are your perceptions regarding the institution of marriage and how do they compare to the beliefs of your future spouse?
- Are you uncertain how the terms of a prenup might compare to your legal rights without one?
- Are you afraid you may offend your prospective spouse by asking about it, or that the discussion would escalate into an argument?
- Conversely, do you not want a prenup and feel your future spouse is pressuring you to make one?
- Have a constructive, open discussion:
- Share your honest opinions in a positive, blame-free manner about each other's needs and concerns.
- Be willing to listen intently, without interrupting and without judgment.
- Assume that you and your prospective spouse won't see eye-to-eye on everything, especially when you first start talking.
Can a prenuptial agreement be changed?
Yes. While a prenuptial agreement is a binding legal contract, it can be modified after marriage if both spouses agree. Changes are typically made through a postnuptial agreement, which allows couples to update financial terms as their circumstances evolve, such as changes in income, assets or family structure. Because the rules and enforceability of postnuptial agreements vary by state, it’s important to consult an attorney licensed in your state before making changes.
You may decide you don’t need or want a prenup. Or you may decide you each have enough at stake to move forward with an agreement, so you can sign it and move on to more “romantic” negotiations — like where to book that honeymoon trip.